May 20, 2022
The price of wheat is surging all over the world, partly as a result of the Russian invasion of Ukraine, but the prices of the three main bread types are fixed by law in Iran. The result is that wheat is being smuggled out of Iran to neighboring countries where it can now bring 15 times as much as farmers get by selling their wheat to the government.
While the price of basic bread is kept low in Iran, the prices of higher grades of bread are not controlled, nor are the prices of other wheat products like pasta, which are now surging.
Agriculture Minister Javad Sadati-nejad told state TV May 4 that the government will pay farmers more to discourage them from sending wheat out of the country but he didn’t say that the government would pay as much as they can get abroad, so the higher price may just cost the government more without halting the smuggling.
The minister also said the government will make direct cash payments to Iranians to make up for the surging cost of pasta and bread types that aren’t controlled by the government.
He also complained that one of Iran’s neighbors is counting on smuggled wheat from Iran to overcome a shortage there though he neglected to name the country.
State broadcasting said pasta prices in Iran have tripled since the invasion of Ukraine. Ukraine and Russia together produce about half the wheat on the international market, and Ukraine cannot export any from its Black Sea ports because of a blockade by the Russian Navy.
India, another major wheat exporter, has ordered a halt to all exports until the government determines if there is enough of a harvest to meet all domestic needs.
Self-sufficiency in wheat has been a major goal of the Islamic Republic ever since the revolution. But it has only been achieved in two years.
In April, Ali-Reza Mohajer, an adviser to the Agricultural Ministry, said wheat production in Iran this Persian year is forecast at 9 million tons, with the government having to import 5.5 million tons, about 18 percent more than last year.
But weeks later in May, Mohammad-Reza Mortazavi, head of the Flour Producers Association, said wheat exports would need to be 6 to 7 million tons this year.
In Beirut, Lebanese President Michel Aoun announced that Iranian Foreign Minister Hossain Amir-Abdollahian had promised to supply Lebanon with the wheat it can no longer get from Ukraine. Amir-Abdollahian made no such announcement in Iran and it is unknown where he expects to get wheat for Lebanon.